How to Get a No Down Payment Car

Can’t afford a down payment? You can still get a car! Here are some simple strategies recommended by experts to get you behind the wheel.
Written by Bonnie Stinson
Reviewed by Carrie Adkins
If you’re willing to accept a very high interest rate, you may be able to finance a car with no down payment. With this strategy, your interest rate could be 20% or higher. If you can save up a very small down payment, your interest rates might be closer to 8%.
Are you in urgent need of a car? Let’s review all your options, including the no down payment car strategy. Whatever you choose, you should definitely shop around. You could qualify for—or negotiate—a better rate if you know what’s available. 
is a good place to start. It’s a super app that helps drivers save money on car-related expenses, like
car insurance
and auto refinancing. But first, let’s get you into the driver’s seat. 

No down payment car loans

Yes, they exist! You may need to shop around to find them, though. Not only is it good to know what’s out there, but you can also play one dealer off another if you have multiple quotes on hand. Try to avoid “
buy here, pay here
” places, however, which may cost you a ton of extra money over the long run.
Dealers are not the only institution that offers loans. Try checking with your local credit union, bank, or even online lenders. Carvana and Capital One are two popular lenders. 
Here are the basic steps to getting a car with no down payment:
  • Know your approximate budget
  • Submit applications to all your lenders in a 14-day window
  • Ask lenders for the “out-the-door” price, which includes taxes and fees
  • Compare deals and pick the best one
The 14-day window helps ensure that the lenders’ credit checks have a minimal impact on your credit score.
Be sure you ask lenders for the “out-the-door” price. You’ll need to borrow the entire amount necessary to finance the car—which includes the taxes and fees for titling—not just the vehicle’s price tag.
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How to negotiate for a no-money-down car loan

Negotiation is easier when you know what lenders want from you. Most prefer borrowers who can show stability and strong financial history. 
In a negotiation, here are the things a lender may be looking for:
  • Good income
  • Good credit history
  • Steady employment
  • Low debt
You will need to provide official documentation to prove that you can repay the loan. Tax returns, bank statements, pay stubs, and employer verification letters may help.

Boost your credit score

How does a credit score affect your ability to buy a car? It mainly impacts the interest rate you can pay.
A score of 680 and higher gives you the best chance of getting a great rate. This is because a high credit score indicates that you have a strong history of making payments on time. A very strong credit score could even win you a no-down payment invitation.
A score below 670 is considered “subprime.” A lender may be willing to waive your down payment with a lower score, but you’ll have to pay a higher interest rate in exchange—which means more money owed over the life of the loan.
You can raise your credit score by paying bills on time and not using your entire credit balance. Check your score using a free service online. If there are any mistakes, contact your credit bureau to let them know promptly.

Apply with a co-signer

If you do not have great credit—or a steady income—you should consider applying for a loan with a co-signer. This strategy could allow you to sidestep a down payment, though your interest rate will still be pretty high. 
Before you take this path, you should know that a co-signer is not just a key that magically unlocks a loan. You and this person will share legal responsibility for the loan. If you miss payments, it will affect not only your credit but theirs, too. 
Choose this approach only if you have a strong relationship with the co-signer and you feel confident about your ability to stay organized and repay on time. Without a down payment, it will take you longer to pay off the entire amount of the loan.

Shop around

As mentioned above, interest rates can vary substantially. Your current bank may offer auto loans, but they may not offer the best possible rate for your unique situation. The best way to know for sure is to shop around.
Credit unions are a great option for people who are eligible for membership. There are also specialized lenders who work with people who cannot offer a down payment. 
Dealers will attempt to rope you into the highest possible interest rate (which means more profit for them in the long term). While this is good business for them, it’s a bad financial move for you. 
The most important thing you can do is familiarize yourself with loan terminology and possible rates. If you arrive armed with knowledge about the average rate available to people in your situation, your negotiation will go much more smoothly.
When it comes down to it, only you can decide which lender makes the most sense for your life—and your wallet.

Save up for a down payment

The truth is, a down payment (of any size) will help you secure the best possible rates on your auto loan. Yes, you can get a car without a down payment. But know that you’ll get a much better deal if you can scrape together even some cash for a small down payment.
The biggest concern with a no-down payment situation is that you could easily get
on your loan. This means that you'll owe more on the car than it’s worth. If you want to sell the car later on, you won’t make a profit—cars depreciate more quickly than you think.

The bottom line

If you have time, we recommend trying to save up for a down payment while boosting your credit score. This strategy will help you qualify for better loan terms that will save you more money down the road. 
If you can't wait, you can buy a car with no down payment. Just be aware that you will probably get stuck with a very high interest rate compared to other borrowers. You could also consider trading in your current car, as some dealers are willing to count trade-in value as a down payment on a new vehicle.
A few final words about car loans: try to find a short-term loan (less than 72 months). Say no to extras like extended warranties, and get your car insurance ready before you sign on the dotted line to avoid any gaps in your insurance coverage.

Affordable car insurance on a new vehicle

Some insurance companies will let you transfer an existing policy to a new vehicle. Others are happy to provide a new policy within just a few hours. Either way, you must have car insurance before you can legally drive a new car off the lot
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The higher the better. 680 is a typical cut-off level. If your credit score is lower than 680, you may struggle to find a lender willing to offer you a no down payment car loan.
If you have good credit, you’re more likely to find a no down payment loan. However, there are two other strategies to get a car with no down payment. First, apply with a cosigner who has excellent credit. Second, trade in your old vehicle and use its value as a down payment.
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